Truck drivers rest in front of containers stacked at the Yangshan Deepwater port in Shanghai, China.

A drop in Chinese exports and falling prices in Japan and Germany underscored the weakness of the world economy, while the IMF said governments are moving too slowly to rid banks of their toxic assets.

Switzerland’s UBS AG, however, provided a reminder of the fragility of the global banking system. The world’s biggest wealth manager said earnings would remain at risk for some time, as it revised up its full-year net loss to 20.9 billion Swiss francs (US$18.1 billion).

European shares fell in early trade.

Strauss-Kahn said the IMF is still projecting the world economy will recover from mid-2010, but only if governments move quickly to implement stimulus measures and banks’ balance sheets are cleared of toxic assets.

“On the [bank] restructuring side things are really lagging… I am afraid that if it goes that way for two or three more months then recovery in 2010 will be difficult,” he told Reuters in an interview.

The effects of the economic downturn are being felt on global trade flows, with China reporting its trade surplus shriveled to $4.84 billion in February, much lower than analysts had expected.

Exports fell by a quarter from year-ago levels, the biggest drop since bankers started keeping records in 1993.

“China has finally and spectacularly succumbed to the world financial crisis on the export side, and it is difficult to see why that would improve in the short term,” said Paul Cavey, an economist with Macquarie Securities in Hong Kong.

Best efforts

Governments are pumping money into their economies and central banks are slashing interest rates in a bid to prevent recession turning to slump.

The US Congress approved Tuesday a $410 billion bill to fund most of the government through to September 30, despite Republican objections to the price tag.

South Korea also plans to introduce a supplementary budget worth $20 billion this month to boost domestic demand, the ruling party was quoted as saying.

In Britain, the Bank of England will officially start quantitative easing – effectively printing money to help pull the economy out of recession.

Despite governments’ best efforts, however, economic data shows no sign of getting better.

Japan said its wholesale prices fell 1.1 percent in February from a year earlier, accelerating sharply from the 0.3 percent annual drop seen in January and prompting warnings that deflationary pressures are building.

“Price declines are spreading from materials to other goods, and consumer prices are likely to start falling,” said Azusa Kato, an economist at BNP Paribas.

In Germany, producer prices fell by 1.2 percent month-on-month in January, much deeper than analysts’ forecast decline of 0.1 percent.

The world’s leaders are under pressure to take further action to boost growth.

Finance ministers from the G20 group of rich nations and emerging powers will meet this weekend in Britain to prepare for a summit in London on April 2, where leaders hope to present a united front in tackling the crisis.

Britain is one of the industrialized nations hardest hit by the recession. Its economy shrank by 1.8 percent in the three months to February, the National Institute of Economic and Social Research said.

Source: Reuters